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tv   Bloomberg Markets Americas  Bloomberg  October 14, 2016 12:00pm-3:31pm EDT

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welcome to bloomberg markets. we are covering stories from new york to bangkok and beijing. a busy morning for bank earnings. beating profit estimates. jpmorgan beating estimates on bond payment. a major source of stress. and it is the oldest among us who are suffering the most. puck.ak with wolfgang first a check on the markets. >> not as much green. we rally much more strongly earlier in the day. it looks like some of the gains are dissipating. the university of michigan consumer confidence data unexpectedly declining for
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october. also coming in its lowest in a year. it's looks like folks who are lower income on the spectrum where those who felt the least confidence. you see this trajectory very clearly here. since then they have been coming down. wells fargo, which had been initially, started to decline as the call was going on. he said it looked like the stock started to turn over when it became clear wells fargo was not going to give more detail about its fake account scandal on the call. some analysts were pushing for the bank to do so.
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jpmorgan has also turned little changed to slightly negative. fixed income trading revenue did be estimates. the shares not able to hold up well. we have retail sales data today. that came in line with a gain of 6/10 of 1%. department scores are lower. saw a decline of 7/10 of 1%. so a pullback is happening today. eating establishments sales were up a tenths of 1%. tuesday.rly ruby finally even though things are looking better today on the we're front, overall waiting for the vix here.
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trepidation, caution coming back to the market. >> thanks for the update. mark crumpton has more. >> republican presidential nominee donald trump is pushing back against allegations of sexual assault. trump says he doesn't know and never even met some of the women accusing him of misconduct. trump is back on the campaign trail with two appearances in north carolina. a promise from mike pence, he tells cbs the campaign plans to release evidence that calls into question these allegations. governor also believes trumps the nile on any wrongdoing. --lary clinton probably says if beijing failed to curb north korea's nuclear program. were revealed by
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wikileaks. those messages included documents exerting private speech transcripts. michigan's attorney general's office spent more than $2 million this year. the detroit free press saying the latest numbers include lawyers, support staff, and investigators salaries. current or former public officials have been criminally charged. thousands of people have been gathered in the streets of thailand's capital. -- thefinal respects world's longest reigning monarch died at the age of 88. his body was transported to the hospital this morning. thailand will spend a year morning their fallen king. news 24 hours per day
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powered by more than 2600 journalists and analysts and more than 120 countries. a one of the disinflation or falling since the start of 2012, turning positive last month. -- reassuring investors there's more positive upside the global financials. he joins us now. we had this uptick in producer prices. digesting that today. >> growth is slowing. and pimco projects growth will be about 6%. that is pretty good. it will be a greater contribution to global gdp than perhaps the united states. 350 billion dollars of
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contribution. there is a major event in china and the leadership changes or standing committee within the it's those changes that investors should be looking at to see what the policy path will be. in other words tried not to be sourced in credit growth. let it shift toward consumption. just looking on google, shanghai today, versus 25 years ago. keeping confidence about china. >> debt to gdp ratios, how much do we need to care? it could be under 250%. it should be way beyond where it should be.
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them as you learned it doesn't matter. the world operates in a fractional reserve. it requires the fate of investors to call up that indebtedness. investors losing globally in investor banks. loan bookshink your too fast because if you do money will vanish. this is what happened during the great depression from 1929 through 1933. the money supply shrank 33%. banks do not replace those loans with new ones, the money vanished from the system in the out ofy that was created thin air. we think nonperforming loans at 1.5% -- we don't think china or put thosedge
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losses on the books. call it 5%. you can probably cut that number in half. the didn't allow those on vocation of keeping companies alive. look for stability in political changes next year. >> one more question on china, how satisfied are you with the degree to which they are communicating about the economy? we have seen it weaken this week. are you happy with the level of communication? >> two devaluations that caused the stock market to fall about 10%. ande was a communique everything changed.
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lagarde scoredne at the point. she said she is delighted with the recent communications by the chinese. the u.s. secretary said similar things. integrating into the global economy for decades. final note this month, china was included. it is becoming integrated to global financial systems. that is good for stability in the long run. >> he looked into the university of michigan consumer sentiment gauge. even that is coming down. the twoit is in arrange. what does the federal reserve do
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? >> it has done as much as it could and central banks are failing in the sense that they are moving up the needle on inflation expectations. it can't create growth, can't educate people. it can't increase the numbers of people. and it can't invest in the economy. that is what ultimately produces inflation. did on the credit channel worked. money that was created by banks than it is today. last year there was negative growth in credit. i mentioned earlier money can vanish from the financial system. trying like heck and hell-bent on printing money. the shipping from rate focus to we are lookingow
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at is from central-bank dominance to fiscal dominance. there hoping japan will be first. more on fiscal spending. more likely from the fed. >> very quickly we are going to be talking with michael mckee at the boston fed stage. their.ellen set to speak fede heard enough from the recently to conclude that it is highly probable that federal rate interest rates in december, barring major surprises and academic data -- surprises in economic data -- simply they reinforce the previous messages. mentioned in a recent statement september 21.
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>> thank you very much. coming up, republican nominee mike pence is telling everyone to stay tuned. >> he's saying we will get more evidence backing trump against his female accusers. we will break it down.
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this is bloomberg markets. david: we will bring back tony from pimco. with --speaking earlier newly money market rules.
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that,s the importance of what it means that these rules have changed. >> it was a windfall in terms of higher interest rates and the yield curve. moved from about 61 basis points to about 90 basis points. about $1 trillion flowed out of money market funds. wringing the total down to about half trillion dollars. some money went into banks and deposits. onre were institutions commercial paper, certificate deposits, that the funds would buy. those that were issuing the paper, commercial paper to go to the marketplace and say we don't have as many buyers as we used to.
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would you buy some for a yet go we will pay you a little more. commercial paper. it paid to step out of the box. which is to say the money market confines you to a short maturity bucket. things go out in little bit to longer maturity. consider a nine-month corporate bond. the credit analyst that can scrub a corporation to look at the balance sheet inside and out to tell you the company will pay you back in nine months. why not take the chance with it. it depends on the credit rating. we can offer yields at 1%.
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does require stepping out of the credit. some volatility. >> looking in the stability of the banks of germany and italy. give us your outlook. >> one we think of banks in europe, we know the ecb officials say european banking system is over bank. the banking system is three times the size of gdp. mario draghi the ecb president wants to slow that case of deleveraging. money could vanish from the financial system and therefore be not available to spend on financial goods and services.
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we have bank capitals that are yielding seven or 8% or so. numerous countries of course, including england and spain. italy is a little shaky. the amount of capital that is needed for the entirety of the something europe would probably find the money for. more and more through retained earnings. or her to do his homework because these banks require a lot of scrutiny. we want to be up in the capital structure and avoid the others. >> we are going to talk about the latest on the campaign. looking at you were
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november 8. >> first checks and balances make me worry less. would look at those things and be optimistic. need is productivity. --s is to boost the output used the output and services. get -- the fed cannot do it. it is derived from three things, people, building, and how we use all those things. see more investment in america. we hope there is some and we should expect some this -- some pivot. may be to invest a little bit more.
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that will be a direct feed into a very poor rate we have seen and low growth rates. one of major reasons the fed is keeping -- janet yellen said in the final paragraph, if we raise the average levels of productivity, it will raise the average level of interest rates. hence a need for a higher interest rate. >> pimco bombed market strategist. >> chairman yellen set to speak the for the annual research conference. bloomberg will have live coverage on tv, radio, our website, and terminal. this is bloomberg.
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>> you're watching bloomberg markets. >> vice presidential hopeful mike pence is new evidence will come to light that will call to question allegations that donald trump kissed and groped women. i reporter has been following the story. -- our reporter has been following the story. journalall street reporting the trump campaign considering releasing what they -- wasevidence that involved in this. he owns his share of the times. the trump campaign has no intention of backing around on this.
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in the coming days they say it will help their case. lead.see a widening let me ask you about the role are clinton is playing. memorable speeches came from her surrogates. he on the campaign trail giving an impassioned speech on the campaign trail. his wife giving an impassioned speech. >> they don't want to compete with donald trump for the new cycle. back,hink it is ok to sit let this play out, let donald trump defend himself in person. he doesn't have the circuit power. hillary clinton did a fundraiser. she tweeted a bunch. she is not out on the campaign trail.
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she is letting this all play out. >> what would be the goal of that campaign? thispeople say that at point. what should their strategy be for the next four weeks or 30 days? measure goal is to people don't say things like that. she has a lot of new battleground state polls. there was a time not too long ago when things were heating up. we saw a couple of them in ohio. they don't want people to take it for granted. even if a victory is imminent, they want the kind of -- want the right kind of victory. they don't want to win because they're putting was so bad nobody voted for him.
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i think the messaging and the type of victory they are trying to achieve matters just as much. since the you have the donald trump has listened to his campaign staff, that there is some cohesion? >> it seems it varies on a day-to-day basis. we saw his poll numbers would be better if he did that. it is a daily thing. >> thank you so much. a daily thing for him as well. david: we will tell you why the department of justice decided not to prosecute those responsible. this is bloomberg.
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vonnie: this is bloomberg world headquarters. david: this is bloomberg markets. it was a 2015 my -- mining spill
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that turned to reverse mustard yellow in colorado. arsenic, lead, and mercury in the waters. in the decision yesterday, the justice department decided not to prosecute those involved in the case. no prosecution here. what would happen instead? i understand the >> inspector general will step appear. > the inspector general has already stepped up. the office has recommended that the justice department consider criminal action in this case. roughly one week ago, the same day, however, the justice department confirmed it would not be pursuing criminal charges. what has happened in recent days basically is some high profile has republicans led by jason j
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chaffi< has confronted loretta lynch to clarify why the justice department will not be moving forward. remember, the justice department never actually publicly disclosed the decision to not move forward with prosecution. that was related to bloomberg and other news outlets via the inspector general office, being the epa watchdog office. chaffetz represented a district attention affected by the spill in southeastern utah. he has requested, along with other colleagues, a briefing by the justice department within two weeks. that is not legally binding, but something we look to in the
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future. vonnie: what might it tell us more that we do not know already? >> what might that tell us more? basically, because of the tightlipped nature of the justice department at this point, we have no idea about their decision-making progress. it was clarified to our news publication that they considered legal actions related to false andement provisions violations of the clean water act. david: thank you. we will see what happens on october 26. vonnie: let's start now with the firstnes from bloomberg word news. mark crumpton has more. mark c.: president obama held a rally for hillary clinton in cleveland. he encouraged ohio democrats to cast their votes now with early
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voting underway. all that obama: progress goes out the window if we do not make the right choice right now. and, it should not be a complicated choice he cut it is ishoice between someone who as qualified as anybody who has ever run for this office, and somebody who has proven himself unfit. mark c.: the president said america is better than donald trump's remarks about women, minorities, and other groups. he said, you do not have to be a husband or a father to know that his comments about women are not right, you just have to be a decent human being. mike pence has responded to the lewd remarks in an interview with cbs news. he said that he did not understand the basis for the first lady's claims. mrs. obama denounced trump, even
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without announcing his name during an emotional speech in new hampshire on thursday. the national hurricane center says that nicole is moving east-northeastern over the atlantic. crews are reviewing and infrastructure. schools and government offices are closed but the islands international airport is expected to reopen. is obama administration easing more sanctions against cuba. that includes eliminating a $100 limit on cuban cigars the american travelers can bring home. then this treasure is also lifting limits on cargo ship travel between the two countries and easing the ability to conduct joint medical research. the changes take place on monday. global news, 24 hours a day,
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powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. beat: jp morgan's earnings analyst estimates as they kicked off the reporting season. let's take a closer look at the bank in today's "numbers don't lie." this is the first time in six quarters that they reported adjusted etf's. the first time they have risen your over here. the big driver behind this was fixed income trading. it was jp morgan highest in 3.5 years. fueled byurge of 48%, a surge of bonds, fueled by the grexit vote in june. consistently low interest rates margins.ped
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its return in equity, orange, falling over the years. there has been a disconnect between rates and equity prices over the past few months. this is correlation of the two-year yield, the most sensitive you in the policy. it turns out that rates may not have had as big of an impact on the stock as investors would have thought. one milestone was jp morgan as the mosts fargo valuable thing. jp morgan hit this mark despite lackluster growth. it was said that monetary and fiscal policy must be courted native. we will be following the stock throughout today's session. vonnie: thank you for that. wells fargo and citigroup also reporting before the bell. both companies posted profits
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that eat estimates, but the stocks are moving in opposite directions. stocks of wells fargo falling. now to discuss the three banks. is there anything we can pull out of the earnings ahead of q4? morgan was projected to have an 8% increase in bond trading. $1beat estimates over billion. they made $1 billion more than people thought they would. that is a lot of money. vonnie: where does it come from? had bank executives moan and complain over the last years of not having enough activity. clients did not have a reason to make new positions. interest rates were moving in
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one direction, lowering, and staying low. what you had brexit and the debate over what will happen in december, you had people who had to move. brexit changed the view of the world a little bit. so to the monetary figures that are coming out. now, you are getting a divergence. that causes action. david: volatility, we have seen such low volatility and foreign exchange. what we see in regards to that? >> citigroup particularly called out for an exchange. they want up 35%, double what anyone else expected. once currencies start to move, you have corporate, the big clients, as well as hedge funds, that need to take action and make bets. vonnie: what are we going to bring forward in the next stage? will be see less of a stellar
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performance from some other struggle will that impact stock prices? >> it should. the bar is much higher than it was yesterday. reportinge of a monday, goldman sachs, and morgan stanley. if they do not do as well as jp morgan and city did, you will start to see them penalized. david: the new ceo of wells fargo, running the call today, just a couple days after he took that job. i know right off the bat he had to address what happened. what did he say what will happen with the bank going forward? >> they are in the midst of this soul-searching process, make sure it will stop going forward. he was -- he laid the expectations low, which i think was a smart thing to do. he said things might get worse before getting better.
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they talked about traffic to branches and sign up for check accounts being much lower given the activity. david: your team reporting today about jp morgan taking a close look at its structure. , you have toe cfo have looked at yourselves as a result of this. she said, yes, and they have found instances of irregularities, but it is not vonnie: systemic. vonnie:vonnie: what will you be looking for when goldman reports? >> they have said, we are keeping our people. i'm also looking at the fourth quarter. vonnie: and the bonus ratios. ok. thank you for joining. david: coming up, wondering where to go to dinner today? we have you covered here and hisgang puck has opened first restaurant in new york city and will join us live in
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the studio. this is bloomberg. ♪
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mark b.: the longest reigning monarch in the world. david: former french economy minister says the u.k. cannot expect to negotiate special privileges on exiting the european union. in paris, at the hello tomorrow -- erence, >> it depends on two things. providehe ability to and to deliver. without an actual plan to brexit and we have i'm very attached to brexit.
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merge a china trying to national chemical group. it will combine to companies with more than 200 million dollars of assets. includeof the deal timing work cleared. cost for the note 7 crisis is mounting. disclosed a took -- negative impact of about 3 billion. that is on top of $2.3 billion in the cuts from the previous time. preparing tois her down by next summer she's says he will continue as
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nonexecutive chairman after he retires on july the first. a special committee will search for a new lender. time now for the quick take where we provide context on issues of interest. reigning's longest monarch. here is a situation. thailand has had so many coups in modern history, they sometimes refer to the last eight decades as cu season. there has been dramatic political strife. the junta has pushed back the timetable on
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elections. here is the background. thailand has had more than 20 prime minister 1946. the economy is resilient, bouncing back from prices of 2007, the tsunami and crippling floods. here is the argument. bangkok's and urban elites have controls. they reject the idea that they are forging democracy saying the damage political system can only .roduce a credible government critics say they have persecuted political opponents. they say the goal of political unity is unrealistic and what is actually needed is robust
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framework that allows politicians to find out about the risk of political meddling. a worse outcome could be a breakup of the country or a civil war. you can read more on the bloomberg. that is the global business report. ♪
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this is bloomberg markets. he is here, the world-famous world-famousn his restaurant in manhattan. in the studio is wolfgang puck. >> we open for breakfast, lunch, and dinner. you know what, bloomberg is my favorite network. asia, iwatch to bloomberg. david: why has it taken you so long to open a restaurant in new york just g? vegashought, atlanta, las , and then, in 2009, when the
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,inancial crisis was really bad i had all my eggs in one basket. vegas, los angeles, and i had 17 or 18 restaurants at that time. it was really hard to operate. i decided, we have to expand nationally and internationally. inopened first in london, singapore. this one here, in the financial , it took them a long time to build it. beautiful influence. first, the neighborhood, financial district, why did you decide on it? >> 25 years ago, i probably would have said midtown.
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now, downtown really has grown up. a lot of condominiums. a lot of people moved there. it is a place to live, it is really amazing. i thought this would be a good place for us. all the obviously, financial centers are down there, all the bankers, and they all love to eat steak. david: you opened it in a hotel. does it make more business sense to have it in the hotel? >> it makes more business sense. we are paying rent to the owners of the building. we are completely separated in a way. the four seasons hotel, they run great hotels, but the restaurants are not the best restaurants unless they have a chef there. today, the equation has changed.
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now, you only talk about shops. , you have one restaurant or four or five more restaurants. david: you are doing state. if you are going to go out for a stay, where do you like to go here to petergo luca. david: they will give you a table. [laughter] >> i have a lot of friends. , if i'msee danielle alone, maybe i eat at the bar there. think new york has so many great restaurants. david: celebrity chef is probably a term that is thrown around too much today. talk about about the burdens, if i can call them that, of being
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that person. how often are you cooking? >> i still have burns. i still cook. in the old time, there was not television for chefs. i remember in the 1980's, like the johnny carson show and david letterman show and good meal -- good morning america. now, with foot tv, travel, whatever the channels are, they all have food on all day. now, chefs become rock 'n roll, rock stars. what i think is great is you get so many more smart people into our business. people who would have become lawyers, doctors, you name it, now, cooking is a great profession. now you have some a smart, young shops. they are able to run their own
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restaurant, supervise a big staff. in the old time, the chef was in the back of the kitchen. david: great to see you. wolfgang puck. for more, go to bloomberg pursuits. a head, janet yellen will be speaking taking place in about half an hour, bloomberg will have live coverage on tv, radio, and our website. this is bloomberg. ♪
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it is 1:00 in new york, 6:00 in london, and 1:00 in hong kong. i'm david gura. welcome to "bloomberg markets."
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bloomberg world headquarters in new york. we are cover stories from san francisco to boston. 30 minutes away from janet yellen sectors take the stage in boston. only get a clear idea. hike is coming this year? we are watching the markets ahead of that speech. the dollar trading at a seven-month high after retail sales came in strong. shares of amd's surging on reports of a deal with alibaba. halfway into the trading day, julie hyman is looking at the major indices. julie: it looks like we are moving towards treading water heading into janet yellen's comments. stocks starting out the day more strongly. now have fallen to some extent. up .4%, the s&p and nasdaq up .2%.
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yes we had a retail sales numbers that came in in line with estimates. the headline number, .6%. on the flipside, consumer sentiment not looking fantastic. university of michigan consumer sentiment measure. preliminary reading for october a year.lowest in readin a lot of concerns reflected within the survey components about expectations six months out about the ability to get a job, inflation as well. some fascinating readings from this report. if you look at the s&p 500 over the course of the day, the drop did not come when that number came out. it was as the day went on and we started to see financials rollover. also as we got closer to these janet yellen comments. whenever we have a fed officials speaking, minutes, we tend to see some sideways movement going into that. look at the two-year.
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definitely not sideways movement. the trendy yielding lower throughout the day, now been changed, but you can see that trajectory tracking stocks. we will be watching this closely in the wake of her comments. even though we are seeing this rolling over, a couple areas where we saw consistent strength throughout the day, i wanted to highlight individual stocks. even though financials are rolling over, not so the case with goldman sachs. according to a judge in london, goldman sachs did not do libyan officials into investments that lost $1.2 billion. this had been the allegation on the part of the libyan investment authority. advanced micro devices says provideplans to cloud services based on its chip. take two interactive, piper jaffray says that software sales were up by 31%, driven by some
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individual games. even ifocks holding up it over all things are less strong than earlier this morning. david: julie hyman, thank you for that market update. be talking about amd and nvidia with cory johnson in a few minutes. first, let's get more on the first word news with mark crumpton. hillary clinton and donald trump are locked in a battle for new hampshire. a poll has clinton at 31%, trump at 38%. libertarian gary johnson gets 11%. matchup,-to-head clinton leads trump 46% to 41% in new hampshire. both have high unfavorable ratings. 54% for clinton, 56% for trump. in rnc raised $39.4 million september, about $9 million less than in september of 2012 when
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mitt romney was the party's presidential nominee. over those two years leading to the election, the rnc said the party's fundraising is up by almost $20 million. the uk's exit negotiations with the european union will be controlled by a select group of 12 ministers from theresa may's cabinet most opposed to increasing powers of the 20 member block, according to documents obtained by bloomberg. it could be another sign the prime and asked her is planning a clean break from the union. the group includes all six members of her cabinet who campaigned to leave the eu at the june referendum am including foreign minister boris johnson. the state department says if you have a passport or visa, you have to take of your glasses for the photo. the steps are being taken to eliminate glares or shadows that cause delays in
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the process or the standards. the effect takes place november 21. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. the crisis in greece is still top of mine for many investors. that country in its third bailout since 2010, still struggling to write its economy, one that has contracted in eight of the last nine years. what is a long-term solution for the country's debt problem? they are trying to figure that out at tufts, the fletcher school. michael mckee is in massachusetts with charles a lara, who was instrumental in negotiating the greek default with banks. mike: thank you. you did negotiate for the international finance group that represented the big banks in the negotiations with greece over its debt. one of the questions being raised here today was whether
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debt relief for greece was handled badly, it should have been done sooner, on a bigger scale, so that it was not always behind the eight ball and did not have to go through three different programs. >> i don't think the timing or the scale of debt relief was really a big problem, nor is it the heart of the problem today. in fact, it turned out to be the largest debt restructuring in history, and still is. we eliminated over 100 billion be wendex in one day transformed another 100 billion into longer-term interest rate debt. the issue of whether it could have come earlier is a bit of an academic issue at this point. the world was not ready, especially not european authorities. for greek debt restructuring. the issue today is not so much, was that restructuring too late or insufficient, but do we not need a restructuring of the official debt, which is now
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hanging on greece like an albatross. mike: that is part of the question of why greece has been unable to get out of its programs, why they have not been able to grow. we are witnessing a modern greek tragedy that could've been written by one of aged great playwrights. has a lot ofccess parents, nobody want to take ownership or a tragedy. the lack of success revolves around political instability and a lack of the ownership and commitment by successive governments to reform. i also think very poor program design by the imf and germany has trapped greece and i cycle of endless austerity. you need to give the greek economy a little room to breathe , relax some of the fiscal targets, so they can actually generate some growth, allowing them to reduce taxes, and put
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some investment into the economy. this would then create the conditions for the crucial structural reforms. i'm afraid the lack of adequate financing and the tight nature of the fiscal targets has put greece in a position of this endless cycle of austerity. to say when greece could come back to the markets, sell bonds to the people you represented? >> markets are always ready to take another look. as we are seeing today in the case of argentina, i was there earlier this year, and one man and his government, the president, has made a huge difference. this could happen for greece at some point. in order for greece to come back to the market, three things have to happen. europe has to recognize and actually deliver on its own debt reduction. this needs to happen sooner rather than later. any have been postponing acknowledgment that they need to
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reduce their claims on greece. acondly, greece needs government that is fully committed to the reform program. clearing away vested interest inside orders of government. thirdly, you need elect fiscal targets. with those ingredients, investment firms will be willing to come back and bring capital back to greece. your let me ask you to put institute for international finance had back on. one of the reasons you had to negotiate so hard for the debt restructuring of greece was the systemic worry of the banks in europe. greece is restructured but the systemic worry still seems to be there. banks in europe don't seem to have restructured enough to satisfy markets. been, all along, a european drama. it is true that many western european banks have not put into place a vision restructuring, sufficient capitalization to cleanse their balance sheet. this hovers now over important parts of the european economy,
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totally apart from greece. greece's banks have now been recapitalized. their ownn deal with problems, clear them off of their balance sheets, even if it means requiring to eat new capital, it will be an opportunity for the economy. unfortunately now, when in europe and european bank leadership to work together to address the cloud hanging over european banks. mike: you were on the inside, now on the outside of the investment world. suisseyst from credit said a couple of years ago that european banks are not investable. would you buy into a european bank right now? as toould not go as far make a blanket statement, but there are many that are not investable. there are some that are. i think we should recognize that some of the leading banks in france, for example, have stabilized their balance sheet, strengthened their capital, reformed risk management and
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liquidity policies. but it is true there is a question that hangs over the ityader issue of invest-abil in many banks. this is not just a function of bank management. it's a function of the regulatory rules which have been developed, which create all of these billing arrangements, where if you want to invest in the debt of one of these banks, that that is vulnerable to being wiped out. if you want to invest in the equity now, you have highly rigid rules which guide the wiping out of the equity at a moment of stress. i think it's important that that evens recognize in today's world there are times when it makes sense, if systemic risk is at play, to utilize government capital to stabilize a banking system. they seem to refuse to recognize that and it is one of the reasons why these banks appear, some of them, investable. sympathize with the
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italians and their wish to put government money into the banks to prop them up in italy, as opposed to giving haircuts to investors? and think the investors creditors should share in the pain but i would certainly sympathize with prime minister renzi in the view that where these issues have a systemic dimension, and where you wipe out local creditors and investors who are the local lifeblood of the business community in dealing, for example, with regional banks in italy, that the government should be able with certain conditions to put in government capital. when government capital was injected into u.s. banks in this 2009, there008 and were cries from all quarters. guess what? better that has been a investment than most of the taxpayer dollars in this country in the last decade. quickly, isn't a systemic
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crisis, should investors panic about what is going on in europe? needdon't think there is a to panic. there are systemic dimensions to well,hat, if not managed could set back the entire process of european recovery. we have been talking today about greek recovery. there was a period of that in 2014. unfortunately, that was lost. i think we need to avoid measures and put in place mechanisms for the banks, even if it requires some use of government capital, to avoid a major setback for the european recovery. charles dallara rock, thank you. back to you david in new york. david: thank you, mike mckee. the former managing director of the institute of international finance. ahead, janet yellen speaks before the federal reserve bank of boston's annual research conference. bloomberg will have live coverage of that on tv, radio, our website, and the bloomberg itself.
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this is bloomberg. ♪
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david: you are watching "bloomberg markets." i'm david gura. thes time for some of biggest business stories in the news right now. china is planning a merger of its top two chemical companies. the deal would combine more than $100 billion in assets. that is according to a progressive delay with the matter who says the goal is to create an oil to chemicals giant as part of their overhaul of state owned enterprises. the deal could complicate the takeover of swiss agrochemical
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firm syngenta. harvard has explored selling part of his private equity portfolio. the largest university endowment help luminary talks with advisers about the potential sale earlier this year. the valuation would likely be below $1 billion in the sale. 20% of the endowments $35.7 billion is in private equity assets. microsoft has filed for regulatory approval from the european commission over its $26 .illion acquisition of linkedin the eu is expected to set a november 22 and nine to conduct a review. the deal is expected to close at the end of the year, it is the biggest in the tech sector this year. that is your business flash update. a quick check on the major indexes right now in the u.s., up aow up .4%, the s&p 500 quarter present, the nasdaq about .5%.
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for more on the nasdaq, abigail doolittle is at the nasdaq marketplace. >> before we have been looking at a very nice rally after yesterday's volatility, but that probably has largely faded. we now have the nasdaq up modestly. the reason it has pulled back closer to even, biotech index has been higher on the day, but now lower by more than 1%. this is fitting what we have seen recently in biotech, on pace for its worst week since april, third down week in a row. lots of weakness in biotech. there does not appear to be a fundamental catalyst for today's weakness. this is important considering biotech is often considered to on another reason the nasdaq has pulled back, amazon. they have been up .7%, now down half a percent.
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another case where there does not appear to be a fundamental catalyst. it could represent early oftters on the parts investors. they have a history of not always meeting or beating. the bar is set pretty high. 90% of analyst were bullish on amazon. lots recently raising their price targets. the expectations are somewhat high going into that quarter, so if they do not meet, the stock could take a beating. we see this huge run that the stock has had off of its february lows, but it is only reversing in waves. amazon is trading below that third trend line, suggesting ,erhaps there is some weakness that buyers are weakening and sellers are starting to set in. perhaps something choppy coming out of that amazon report on
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october 27. you, abigail. still ahead, we look forward to janet yellen's speech in boston. will she signal where the fed is headed, and what message will she tried to send? this is bloomberg. ♪
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david: this is "bloomberg markets." i'm david gura. at 1:30 p.m. eastern time, janet yellen is set to speak at the 60th economic research conference hosted by the federal reserve bank of boston. the banks president eric rosengren spoke this morning. mike mckee is doing humans work for us in boston todayl ahead of those remarks. what we arense of listening from janet yellen today. you have been a ton of speeches from policy makers. we have not heard from chair yellen in a while. what are we listening for?
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ise: the conference is what going on with the economic recovery and why it is going so slowly. there'll be some theorizing on her part in my productivity has fallen off in the last several years. it's one of the reasons we are not seeing a lot of growth. interest rates, which is why all the traders are staying at their desks, it will probably be a message of study as she goes. we are open to the idea of a rate increase sooner rather than later suggesting there was never another press conference at the december meeting. there has not been any change in the economy or in the data that would move up or delay the idea of a december rate increase. she will probably want to leave markets about where they were going into this when she is done. david: talk about eric rosengren's speech this morning, the fed may consider
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repositioning the composition of bonds. rosengren is one of three members pushing for them to raise rates sooner rather than later. it is almost two separate things. the reason he said he would like to see rates rise is because he is worried about distortions in the financial markets, particularly commercial real estate. in terms of steepening the yield curve, that gets back to the growth weston and the topic of this conference at the boston fed. yieldsuggesting a steeper curve has traditionally shown the economy is getting stronger and possibly generating more inflation because you want to have that inflation compensation the farther you go out on the yield curve. it is similar to what the bank of japan is talking about doing now. they are pinning their ten-year note yield at 0% because they want a long-term expectations for inflation higher. rosengren did not suggest pinning the number or picking a target for the 10-year but did suggest maybe the fed would do the reserve -- reverse
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operations, go out longer on the curve, sell some of the long-term securities, so that the yield would arise, and the yield curve would steepen and perhaps convince markets that the economy is getting better and inflation will come back. wasd: tony crescenta he here a few minutes ago talking about productivity. i look at the agenda for the conference. the labor market is still very much in focus here, even if there is some agreement we are getting close to full employment if we are not there altogether. we are pretty much at what the normal definition of what the fed would say is full employment because they figure between 4% and 5%. you can argue over tenths. the labor market still seems firm, falling to a 41-year low. it does not look like we will see a chance of a recession in the near future. the question is, can you get productivity of so that you can afford to give people raises?
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that is the question, why are we not seeing that? coming into the workplace and displacing workers but not adding to their productivity? thet of people would say iphone may enable you to play games and communicate but it's not making you a better worker or producing more for your employer. that is the question people are figuring out. where did productivity go, and what brings it back? mckee joining us from boston ahead of that janet yellen speech. janet yellen is set to speak at 1:30 p.m. eastern time. we will carry those remarks live on bloomberg television, radio, website, and on the bloomberg. this is bloomberg. ♪
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david: breaking news on salesforce. twitter suitors banished as salesforce rules are out. mark benioff, the ceo of
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salesforce saying twitter is not the right fit for his cloud computing company. out a takeover of twitter. we have seen a great movement in salesforce stock. twitter also down 7% on those reports that salesforce is not interested in acquiring twitter. we are awaiting janet yellen who is set to speak at the boston fed in a few minutes. we have prepared versions of their marks she is set to give. looking at what she is planning to cover in that speech, she is excited to say forward guys may be needed by central banks, says it is unlikely cuts will be , the labor market inflation relationship does seem weaker. she says there are multiple questions facing the economics. exceptional strategies may be needed again in the future. remarks,t the prepared which she is expected to give at the boston research fed conference. i want to go back to michael
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mckee who is in boston for his reaction on what we expect janet yellen to say. what stood out among those the things you: are pointing out our think that the fed has been discussing a while. what will really get people's attention is a slightly dovish cast to this. i am going to warn people that she is talking in theory, about the possibility of maybe being more dovish. david: i hate to cut you off, fed chair janet yellen coming to the stage now. >> have often challenged existing views of how the economy worked and exposed shortcomings in the collective knowledge of economists. to give two well-known examples, both the great depression and the stagflation of the 1970's motivated new waves of thinking about economic phenomena. more recently, the financial
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crisis and its aftermath might well prove to be a similar sort of turning point. today, i'd like to reflect on some ways in which the events of the past few years have revealed limits in the economists understanding of the economy and suggest several important questions i hope the profession will try to answer. in of these questions are not new, the recent events have made them more urgent. appropriately, some are addressed by the papers prepared for this conference. pursuing answers to these questions is vital work of the federal reserve and other economic policymakers, and the fed is likewise engaged in ongoing research to seek answers . the first question i would like to pose concerns the distinction between aggregate supply and aggregate demand. are there circumstances in which changes in aggregate demand can
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have an appreciable, persistent effect on aggregate supply? prior to the great recession, most economists would probably have answered this question with a qualified no. they would have broadly agreed with robert solow, that economic output over the longer term is primarily driven by supply, the amount of output and goods and services the economy is capable of producing given its labor and capital resources in existing technologies, aggregate demand in contrast we see as explaining shorter-term fluctuations around the mostly exhaustion is supply determined longer run trend. this conclusion deserves to be reconsidered in light of the failure of the level of economic activity to return to its prerecession trend in most advanced economies.
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this post crisis experience suggests the changes in aggregate demand may have an appreciable, persistent effect on aggregate supply that is on potential output. of persistent shortfalls and aggregate demand could adversely affect the supply side of the economy and the fed, and he refers to as hysteresis is not new. for example, the possibility was discussed back in the mid-1980's with regard to the performance of european labor markets. but interest in the topic has increased in light of the persistent slow down and economic growth seen in many developed economies since the crisis. several recent studies present cost -- cross-country evidence come indicating severe and persistent recessions have historically had the sorts of long-term effects, even for downturns that appear to have
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resulted largely or entirely from a shock to aggregate demand. with regard to the u.s. experience, one study estimates the level of potential output is now 7% below what would have been expected based on its precrisis trajectory, and it argues much of the supply side damage is attributable to several developments that likely occurred as a result of the deep recession in slower curry -- and slower recovery. in particular, in the wake of the crisis, the united states experienced a modest reduction in labor supply as a result of reduced immigration and the fall in labor force participation beyond what can be explained by cyclical conditions and demographic factors, as well as a mark to slow down in the estimated trading growth rate of labor productivity.
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the latter likely reflects an unusually slow pace of business capital accumulation since the conjectural lee, a sharp decline in spending in research and development and the slow pace of new firm formation in recent years. if we assume that history's decision is present in some degree after deep recessions, the natural next question is to ask whether it might be possible to reverse these adverse supply side affects by temporarily running a high-pressure economy with robust aggregate demand in a tight labor market. one can certainly identify possible ways in which this might occur. increased business sales would almost certainly raise the productive capacity of the economy by encouraging additional capital spending, especially if a company by reduced uncertainty about future prospects.
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in addition, a tight labor market may throw in potential workers who might otherwise sit on the sidelines and encourage job to job transitions that could also lead to more , enhanced, more productive job matches. finally, albeit more speculatively, strong demand could potentially yield significant activity gains by, among other things, prompting higher levels of research and development spending and increasing the incentives to start new, innovative businesses. hysteresis effects and the possibility they might be reversed could have important implications for the conduct of monetary and fiscal policy. for example, hysteresis would seem to make it even more important for policymakers to act quickly and aggressively in response to a recession because doing so would help to reduce the depth and persistence of the
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theturn, thereby limiting supply side damage that might otherwise ensue. in addition to strong economic conditions, can partially reverse supply side damage after it has occurred, then policymakers may want to aim at being more accommodated her recoveries than would be called for under the traditional view that supply is largely independent of demand. more research is needed, however, to better understand the influence of movements in aggregate demand on aggregate supply. from a policy perspective, we of course need to bear in mind, and accommodative monetary stance, if maintained for too long, could have costs that exceed the benefits by increasing the risk of financial instability or undermining price stability. more generally, the benefits and potential cost of pursuing such
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a strategy remain hard to qualify -- quantify, and other policies might be better suited to address damage to the supply side of the economy. my second question asks whether individual differences within broad groups of actors within the economy can influence aggregate economic outcomes? in particular, what affect does such heterogeneity have on aggregate demand? many macroeconomists work with models, where groups of individual actors such as households are firms are traded as a single or presented agent whose behavior stands in for that of the group as a whole. for example, extensively modeling and adding in the actions of a large number of different households, a macro mayl may student assume --
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assume that the average household can describe the behavior of all households. prior to the financial crisis, the so-called representative agent models were the dominant paradigm for analyzing many macro economic questions. however, this aggregated approach seems needed to understand key aspects of the great recession. to give one example, consider the effects of negative housing equity on consumption. although households typically reduce their spending in response to wealth declines, the many households whose equity positions in their homes were actually driven negative by the reduction in house prices may have curtailed their spending even more sharply because of a markedly reduced ability to borrow. such a development in turn would ship the relationship between housing equity, which remains
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solidly positive in the aggregate, and consumer spending for the economy as a whole. such a shift in the aggregate relationship would be difficult to understand or predict without using disaggregated data and models. more generally, studying the effects of household heterogeneity may better account for the severity of the recession and the slow recovery. at the household level, research can amplifygeneity the effects of adverse shocks, a result that is largely driven by households with very little net worth that sharply increase their savings in a recession. at the firm level, there is evidence financial constraints had a particularly large effect on employment at small firms and the startup of new firms.
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factors that may be part of the explanation for the great long-duration and subsequent slow recovery. more generally, if larger firms seeking to expand have better access to credit than smaller ones, overall growth and investment in employment could depend in part on the distribution of sales across different types of businesses. modeling any of these issues quantitatively will likely require the use of a heterogeneous agent framework. economists understanding of how changes in fiscal and monetary policy affect the economy might also benefit from the recognition that households and firms are heterogeneous. for example, in simple textbook models of the monetary transmission mechanism, central banks operate largely through
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the affect of real interest rates on consumption and investment. once heterogeneity is taken into account, other important channels emerge. for example, spending by many households and firms appears to be quite sensitive to changes in labor income, business sales, or the value of collateral that, in turn, affects their access to credit. conditions that monetary policy affects only indirectly. studying monetary models with heterogeneous agents more closely could help shed on these aspects of the monetary .ransmission mechanism the economics profession has long been aware that these .ssues matter there affects have been incorporated into macro models only to a very limited extent prior to the financial crisis. i am glad to now see a greater
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emphasis on the possible macro economic consequences of heterogeneity, including work done by the economist at the federal reserve. nevertheless, the various linkages between heterogeneity and aggregate demand are not yet well understood, either empirically or theoretically. broadly, even though the tools of monetary policy are generally not well suited to achieve distributional objectives, it's important for policymakers to understand and monitor the effects of macro economic developments on different groups within society. my third question concerns key issue for monetary policy and macro economics. it is less directly addressed by this conference. how does the financial sector interact with the broader economy?
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in light of the housing bubble and subsequent events, policymakers need to better understand what kinds of developments can contribute to , what is theses relationship between the buildup of excessive leverage and the value of real estate and other types of collateral, and what factors impede or facilitate deleveraging process that follows? the economic follow-up from a financial crisis depend on the particulars of a crisis, such as whether it involves widespread damage to household balance sheets? the nature and degree of interconnections between financial firms affect the propagation and amplification of stress through the financial system and overall economy? importantly,most what can monetary policy and financial oversight due to
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reduce the frequency and severity of future crises? although the scope of these questions extends beyond the themes of this conference, it does include issues that are closely related. consider the influence of balance sheet conditions and non-interest credit terms on spending and overall activity, an area where it is important to take into account differences across individual households and firms, as i noted. research on this topic has of course been ongoing for some time, and it has expanded greatly in the wake of the financial crisis. but i believe we have a lot more to learn about the ways in which changes in underwriting standards and other determinants of credit availability interact with interest rates to affect such things as consumer andding, housing demand, home prices, business investment, especially for small firms, and the formation of new
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firms. for example, it is the persistent increase in the personal saving rate that we have observed since the collapse of the housing bubble primarily a result of the sustained shift toward more prudent underwriting standards by lender and -- lenders? is this thing that will prove transitory once households finish improving their balance sheets or become more confident about their future prospects for employment and income? the answer to the latter question could have significant implications to the longer run normal or neutral level of a just rates, and thus the conduct of monetary policy. my fourth question goes to the heart of monetary policy. what determines inflation? from my perspective, the standing framework for thinking about inflation dynamics used by
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central bank economists and others prior to the financial crisis remains conceptually useful today. a simple description of this framework might go something like this. inflation is characterized by an underlying trend that has been essentially constant since the mid-1990's. previously, this trend seemed to drift over time, influenced by actual past inflation or other economic conditions. theory and evidence suggests this trend is strongly influenced by inflation , in turn,ns that depend on monetary policy. in particular, it's remarkable stability of various measures of expected inflation in recent years, presumably represents the fruits of the federal reserve's sustained efforts since the
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early 1980's to bring down and stabilize inflation at a low level. the anchoring of inflation expectations is resulted from this policy does not, however, prevent actual inflation from fluctuating from year-to-year in response to the temporary influence of movements in energy prices and other disturbances. in addition, inflation will tend to run above or below its underlying trend, to the extent resource utilization, which may serve as an indicator of firms marginal costs, is persistently high or low. general framework for thinking about the inflation process remains useful. questions about some of its quantitative features have arisen in the wake of the great recession and subsequent slow recovery. for example, the influence of labor market conditions on inflation in recent years seems to be weaker than commonly
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thought prior to the financial crisis. although inflation l through the recession, the decline was quite modest given how high unemployment rose. likewise, wages and prices rose comparatively little as the labor market gradually recovered . whether this reduction in sensitivity was somehow caused by the recession or instead predated it and was merely revealed under extreme conditions is unclear. either way, the underlying cost is unknown. does reduced sensitivity reflect global changes, such as a greater role for intangible capital production? does it reduce the importance of cyclical swings in domestic activity for firms marginal cost and pricing power? does it perhaps reflect the
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well-documented reluctance or alternatively limited ability of firms to cut the nominal wages of their employees, which could help to explain the relatively moderate movements in inflation we saw during and after the recession? another gap in our knowledge about the measure of the inflation process involves expectations. although many theoretical models suggest actual inflation should be most closely related to short run inflation expectations, as an empirical matter, measures of long-run expectations appear to explain the data better. another unresolved issue concerns whose expectations? those of consumers, firms, and investors are most relevant for wages and price setting. a point on which very provides no clear-cut guidance. more generally, the precise
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manner in which expectations influence inflation deserves .urther study perhaps more importantly, we need to know more about the manner in which inflation expectations are formed, and how .onetary policy influences them ultimately, both actual and expected inflation are tied to the central banks inflation , whether that target is exquisite or implicit. but how does this anchoring process occur? does a central bank have to keep actual inflation near the target rate for many years before inflation expectations completely conform? can policymakers instead materially influence inflation expectations, directly and quickly by simply announcing their intention to pursue a particular inflation goal in the future? or does the truth lies somewhere
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in between with the change in expectations requiring some combination of clear communications about ,olicymakers inflation goal concrete policy actions to demonstrate their commitment to that goal, and at least some success in moving actual inflation toward its desired level in order to demonstrate .he feasibility of strategy although historical experience suggests the changing of the public's expectations would be neither quick nor easy, it is not clear which of these possibilities is correct. nominal short-term interest rates at or close to their effective lower bound in many countries, the broader question of how expectations are formed has taken on heightened importance. under such circumstances, many central banks who sought additional ways to stimulate their economies, including
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adopting policies that are directly aimed at influencing expectations of future interest rates and inflation. the unusually exquisite and extended guidance about the likely future path of the federal funds rate that was provided by the fomc from 2011 through 2014 is an example of such a policy, as is the bank of upward revision to its official inflation objective in 2013. moreover, these and other expectation all strategies may be needed again in the future given the likelihood that the global economy may continue to experience historically low interest rates, thereby making it unlikely that reductions in short-term interest rates alone would be an adequate response to a future recession. i hope of these reasons,
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that researchers will strive to improve our understanding of inflation dynamics and its interactions with monetary policy. before closing, let me mention one additional area where more study is needed. the effects of changes in u.s. monetary policy on financial and economic conditions in the rest of the world, and the ways in which those foreign fx can feed back to influence conditions here at home. of course, cross-country monetary policy spillovers have been the subjects of scholarly debate since the great depression, and much of the formal analysis of this topic dates back to the early 1960's. but this issue has received renewed interest with the advent of unconventional monetary policies after the great , and more recently, the divergence of monetary policies among major advanced
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economy central banks. broadly speaking, monetary policy actions in one country spillover to other countries through three main channels. changes in exchange rates, changes in domestic demand, which alter the economies imports, and changes in domestic financial conditions, such as interest rates and asset prices that, through portfolio balance and other channels, fx financial conditions abroad. research by federal reserve staff suggests that all told u.s. monetary spillover to other economies are positive. policies designed to provide stimulus to the u.s. economy also boost activity abroad, as negative affects of dollar depreciation are offset by positive effects of higher
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u.s. imports and easier for an financial conditions. however, this issue is far from settled, as are a host of other related questions, including the following. do u.s. monetary policy actions affect advanced and emerging-market countries differently? do conventional and unconventional monetary policies spillover to other countries differently? and to what extent are u.s. interest rates and financial conditions influenced by easing measures abroad? closing, i would like to commend the federal reserve bank of boston for organizing this conference and fostering on questionsdebate vital to our understanding of the economy. answering these questions will help the federal reserve's efforts to promote a healthy economy, and i'm grateful for
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the opportunity to speak to you today and be part of this important discussion. thanks so much. [applause] dallas janet yellen speaking from the 60th annual economic conference hosted by the u.s. federal reserve's bank of austin. in terms of impact on the markets, the major indexes are higher, they were higher before the speech began, they did not change much. matt: we did not get back to the highs of the day. the same is true for interest rates, a little bit of a spike in interest rates but they did not come back to session highs that we saw at 1.77 percent for the 10 year. she mainly was talking about how running the economy hot could be a strategy to solve some of the problems that were caused by the great recession. she says that it could, for example, having a tighter labor market improve productivity and bring some workers who otherwise
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would remain on the sidelines back into the pool of labor. she said that there could be risks to this strategy that may outweigh the benefits. typical economist on the one hand, on the other hand, and not really giving us a real hand at monetary policy. not get muchid clarity on whether the fed would move ahead with a december rate increase. the data this morning would seem to suggest the economy is ready for one, given retail sales rose .6% in the month of september, ppi coming in better than anticipated, and the. smother retail sales numbers for august also revised higher, in that there were none of the had been previously reported. the date it would indicate that the economy is ready for an increase. today's data. matt: we still have a little bit of data to come before the december meeting. a lot of people have ruled on the november meeting. puts the november
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meeting at about 17%, december at 66%. let's talk about the markets. julie hyman is closed -- standing by with the latest on the action. did you see any real effects from janet yellen's speech? julie: not any real effects. you could say recent commentary and the dissent at the last meeting switching to being more hawkish. her commentary would seem to lean more dovish talking about letting the economy run hot potentially going forward. a little bit back and forth. we are seeing stocks hold relatively steady. for a better look at that, take a look at the today chart. we had a drop in the index and then it came back as the day went on. we gapped higher and have been declining and then a take up as
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she was speaking. but not much of a change, a ten th of a percent drop. been seeinglar has action. in today's session it is still --her community can see higher. are confused about where we go from here. a little bit of a take up in the u.s. dollar and that move looks fairly dramatic in the dollar index. looking at the bond market to see the reaction there. the curve is more sensitive to inflation and rate talk. before yellen began speaking we had seen yields turned negative but they are off a big move there. getting back to stocks i do want to mention some latebreaking news just coming out. salesforce would
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not been for twitter. d for twitter. .alesforce and by 7% according to some analysts the idea that it would buy twitter was universally condemned or criticized on the part of analysts and investors. that explains the pop that we are seeing there. a lot of investors are asking where twitter goes from here. scarlet: thank you for giving us the recap of how the markets are trading. for more on yet -- janet yellen speech we bring in our guest. if you come inside the bloomberg there is a picture of how do janet yellen speaking to a packed room. it highlights how much anticipation was put into the speech. what did investors learn?
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no [inaudible] yes: it was closely watched and she took a step back and was much more theoretical. it post a lot of questions. there were more questions and answers in the speech. the questions tell you something about her philosophy and the things she is considering. we are referencing reo sp and pop culture. if we were to boil down her speech it is more cowbell. she wants to push the economy higher and she is curious about his participation test by running the economy hot. it was alluded to in the fed minutes that there was this discussion about what if the neutral rate is below where we think it is and what if we let the economy run hot, there is a camp at the fed that is evaluating this and the few
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people or some participants said no, the old rules apply. we can do this experiment. the fact that the fed was considering this at the september meeting is instructive. the answers are not so much about the december meeting but about the conviction of the pace of tightening in the future, especially 17. scarlet: a lot of existential musings from the fed chair. does that mean the fed will not move in december, does that hold back the fed? is on a glide path to the december meeting and there are few things that could bump them off of that course. it would have to be a severe market or economic shock to push that. there is a broad consensus between the hawks and doves. everyone has a reason why they believe december is appropriate. there are few things like -- us off the push course. she alluded to the fact that the
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phillips curve relationship between unemployment and inflation may be flatter but she does not believe it is broken. similarly, the traditional relationships between inflation and growth in the economy, she thinks those are holding up, there may be some deviations. this is not someone who is ripping up the script and thinking we need a new game plan. maybe instead just looking at ,his term she was dropping storesis.ays -- hi know yourn't knowledge of history but has a fed ever wanted to juice monetary policy for all he could get as much as this fed wants to? happeningngs were like this in the 19 cc and 1970's. there is a risk that if you overdo it then you could have flareups in the stagflation environment we saw in the 19 fed
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-- 1970's. that was the lowest point for fed credibility in history. discussion was this that was evident at the september meeting. policymakers are afraid of -- the fed is conservative. they are averse to renminbis experience on -- experiments on a grand scale. scarlet: thank you for giving us your instant analysis. matt: for more in the fed and the economy where joined by the chief u.s. economist at rbc cap to markets coming to us from his office in new york. let me first get your reaction to janet yellen's comments. it was mostly a big picture macro talk and not a lot of hands if i am correct as to what she plans on doing for monetary policy. guest: i think that is exactly right. if you were hoping to glean some direction as to what will happen in december you are not going to
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get that from this report. i do think there is interesting in -- ideas. of thenot been a big fan way that she is presenting the idea of maybe will get -- we will go into december. it hangs the notion on we need just a couple of more payroll reports we can understand if there is still slack out there. that is not the way that conversation works. you do not know if there is any additional slack or not or not slack based on two more payroll reports. that is a highly academic idea. you either think there is slack today or you do not. doing, this is what i like, she is adding some meat to that broader idea to move this notion of historesis. is path she is going down. she is highlighting her argument continue toe will
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scale back expectations for rate hikes. she did not necessarily offer answers. one point she made was central bankers do not have a great expectation of how they work. would that argue for that lesson the future? >> it is fascinating. words, welly said the do not know exactly where we are from a cycle perspective. that is one of the reasons she wants to continue to push back on the idea of significant rate hikes down the road. i have been saying this for a while. people are asking the wrong question. the wrong question is when does the fed hike next, how many hikes does the fed have left? after you read a speech like this you have to come down on the side that there is a handful of more hikes left for this fed.
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matt: i was looking at it chart that shows the long-term expectations. it has come to the lowest level we have ever seen. so it seems like she would not have to push back so much, just show us the data. do you believe that the fed is data dependent? is not would suggest necessarily data. it is much more than that. thisn is wondering if scaling back in aggregate demand has had a profound impact. and if that is true, if she is starting to go down that path or compete -- believe in that idea more, the next payroll report does not make a difference on what would happen. scarlet: we can look back at some of the data, whether it is ppi or retail sales. what did we learn from the latest data sets on hold --
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wholesale data? was attached light. we did have to scale back our consumption numbers that we scaled it back by a 10th. that is not necessarily something to get worried about. we went from 2.8% to 2.7%. with a it is consistent steady as she goes consumer. news, doesat good that jive with what the fed is that he about doing? >> nothing has changed. the consumer profile today is the profile we have had over the last two years. i think the fed is going to continue to whittle down not because of any one quarter's gdp report. because of everything we have been talking about, this notion of hysteresis.
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as we look forward, what do you think we have learned from the big banks results this morning from j.p. morgan and citigroup. trading results were better than anticipated. guest: we are not -- broadly speaking we remain in the backdrop where economic activity looks to be pretty sound from our perspective. the wage data well we have scale that back continue to drive home this idea that the consumer will 2% to 2.5% run rate. earnings reports notwithstanding. matt: thanks for joining us. at rbcef u.s. economist
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capital markets. scarlet: let's check in on the first word news headlines. mark crumpton has more. mark: another woman has come forward claiming donald trump has groped her in the 1990's. the washington post reports kri sten anderson was uncrowded nightspot when she claims trump coached her -- touched her inappropriately. she is one of a number of women who said trump has made unwanted sexual advances. anderson is said making the whole thing up. president obama held a rally in cleveland. he urged democrats to cast their ballots now with early voting underway in the state. president obama said people should ignore the political noise. president obama: her opponents made it clear he will drag this election as long as it can possibly go. and he figures that if he makes our politics toxic then maybe
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you will just figure out you have no good choices and you get discouraged and you do not vote. but do not fall for it. mark: the president was interrupted by a pro-trump protesters shouting about mr. clinton's rape allegations. the florida supreme court has ruled that a death sentence requires a unanimous jury. the court struck down a law that allows us -- a defendant to be sentenced to death as long as 10 out of 12 jurors recommend it. the decision puts the capital punishment law in limbo. there are 385 inmates in death through in florida. tens of thousands of people in thailand line the streets of bangkok to pay final respects to the king. the world's longest reigning monarch died thursday at the age of 88. his body was transported from the hospital to the palace this morning. his only son and era parent led
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the procession. ning period -- mourin in thailand will last year. -- will last one year. crumpton. this is bloomberg. back to you. scarlet: coming up, brexit could be an opportunity for france. we will have more on his campaign for change. this is bloomberg. ♪
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matt: this is bloomberg markets. scarlet: the first edition of fellow tomorrow began in paris. the summit brings together
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entrepreneurs and investors and academics who talk about innovation. francine lacqua sat down in an exclusive interview with the former french economy minister. into timber he quit the cabinet to campaign for change and he shared his vision with francine. guest: if we are in the situation, what i want to do now is to build division ii finalize , to gather people, to have 88,000 members in my party, i am not in that with the socialist party, i am brand-new. i am seven-month-old -- seven months old. the critical question would be to [indiscernible] >> can you become a financial capital? >> i believe that. actively france has to be much more attractive for business by
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simple flying and streamlining the organization and brexit could be important. it depends on two things. our ability to provide [indiscernible] and ability to deliver. [indiscernible] second -- i am attached to a strict process. i do respect the british about. definedpect the agenda by the british trimester. at the same time, the worst thing would be to have a source of a week europe. not give anything on immigration, if they want to take control the means that they
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will lose single access to the single market. >> you can -- it is impossible. >> they are either in or out. >> exactly. you have to contribute and you have to create deals on other issues. you do not want to access to the single market. you can have this sort of new organization. do you want just a trade relationship western arctic could be something like canada. do you want something like norway or switzerland? we have to define together. i don't want a stalemate approach where the brits will -- there is a big incentive for the other members of the the to leave or to kill
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european ideas. it is based on common solidarity.ty and that is a critical point especially when you speak about immigration. everyone has to contribute. it is impossible to leave the burden to some members. anhave to organize appropriate approach. everyone has to take thereon part of the burden. that is part of the eu. >> that was the french economy minister. oft: right spoke to the ceo bnp paribas. specialized entry points for those guys. they are not going to join the bank as a customer like a regular small company. with special platforms. they are running out of time.
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you have to understand facts. they would never visit the bank physically. it is a totally different approach. thee talk often about european sector over banking in europe, does it have an impact because of the new generation? >> the old saving and loan type of approach will have to concentrate because this is the old industry. we have to move for something relevantotally new, and state-of-the-art. he can change rapidly because this is a universe that we -- will never stabilize. it is moving. you have to adapt quite fast. >> you spent a lot of time with the innovation and entrepreneurs, it seems like the u.s. do it differently. they scale up.
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this is why we have over -- ub er. >> one of the weakness of europe is you do not have an integrated rested market. station, awhat number of factors. when you are in the u.s. you have the good idea, you have the ecosystem. when you are in europe it is much more difficult. this is one of the challenges for europe. we need to build that huge european domestic market. the np paribas' ceo speaking with francine lacqua in paris. president obama made his latest appearance on behalf of hillary clinton in cleveland. we will take a look at whether he can use his own avail -- appeal to motivate key voting blocs. this is bloomberg. ♪
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scarlet: this is bloomberg markets. matt: time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. dupont is playing to sell a business, making herbicides to ease antitrust sticking points in its merger with dow chemical. according to people with knowledge. they declined to be identified. ever corp. partners has been hired as an advisor. upon is considering the disposal of the incessant aside and seeds unit that might be an obstacle going forward. china is planning a merger of its top two chemical companies, an of camp -- according to person familiar. the goal is to create an oil to chemicals giant. the deal could have made -- b takeover of their agrochem firm. unveiled its own
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laptop computer. it will run on the companies own operating system. alibaba hundred with hp and intel on the project. the computer will be used in cloud-based education and multimedia presentations. businessour bloomberg flash update. scarlet: let's get you a check on how u.s. stocks are faring. you can see that the dow in the us -- s&p and nasdaq are holding onto gains. much more of an existential speech, no change. we're looking at oil prices down right now. they have fallen as much as 1.1% . still up for the week. this is bloomberg. ♪
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when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. scarlet: this is bloomberg markets. i am scarlet fu. matt: i am matt miller. commodity markets are closing in new york. julie hyman has a check.
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julie: i want to start with natural gas which has been up big mover. it is having a pullback, 1.6% but that is a reversal from what we have seen as of late particularly if you look at this weekly performance here. we have natural gas climbing 2.9% on the week, the big advance came yesterday when weekly inventory data came in and showed a smaller build. natural gas is up here today. in addition to getting the oil rig count we get the weekly gas rig count. the declines we have seen here. up, 12% whichick is the biggest single weekly percentage game going all the way back to 1993. so from low levels and we are starting to see natural gas producers start to pump gas once again. as for oil and what we saw in today's session, a little bit of a decline, off .25 of 1%.
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watching the rig count when it comes to oil rigs. we see an increase in oil rigs coming off of the low base. after a long streak of declining rigs this is their week over week change. we are starting to see it take up once again. we had -- we are starting to see a rebound in oil prices as well as natural gas prices, getting these producers back into the again.back producing we will see once that supply starts to come to market more in earnest what effects it ends up happening. scarlet: i want to focus on which had a $30 billion market cap and is the biggest nuclear generator and the united states. the company completed a merger with pepco holdings in march. it is investing $25 billion on infrastructure, smart grid
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technology and other improvements to stay ahead on an already accelerated growth path. i spoke with exelon ceo where he was opening -- ringing the opening bell and i began by asking them about the building up of profit. >> it will be a trajectory over five years. each year will increase on a level increase getting to the 70% i 2012 is our projection. scarlet: is this an admission that natural gas prices are unlikely to get above the historical long-term average? >> we think natural gas is around that for dollar price point. as more transmission is developed and more industrial load is created and exports start to take place. scarlet: got it. do you have a projection as to
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how high gas could go before comes back to reverting? >> it depends on the winner. we have to see what the weather holds. if we have a cold winter wheat -- you will see more price volatility. warmer winter, higher storage levels, you will not see the volatility come into the market. exelon: let's talk about and its acquisition effort. do you anticipate further purchases of regulated electric and gas companies? guest: we're focused on the integration of the pepco holding companies. it is a lot of work to integrate and get the performance for the customers we want it to be. growth of 25ganic billion on our own is like adding another pepco without paying a premium. right now premiums are pretty rich in the sector. and so we're going to sit --
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stick to our knitting and work on our organic to bellman in improving customer satisfaction and reliability. scarlet: is -- if there is a correction with that create more favorable conditions for purchases? >> it depends on how we are trading. we are trading at a discount to our peers and so it would not be the time for us to be using our equity. we need to see parity with the peers. that continues to take hold. usingen you may look at equity. right now it is not time to put more debt on the holding company balance sheet or time to be using our equity just to stay to our own organic growth. scarlet: a very prudent approach. twomentioned the closing of nuclear plants. what is the likelihood that the legislature will rescue those plans as exelon has requested?
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>> we have worked with a diverse group of stakeholders to prepare what we think is a good market fix to compensate the nuclear plants for their emission free production. we have a 60 time in november to try to do that. we know it is a high priority of thategislative leadership we will have to see how it works out in november. scarlet: in terms of nuclear power plant subsidies, there's a lot of legal opposition. how optimistic are you that it will proceed as planned so you can open or keep open your existing plants and complete the purchase of fitzpatrick nuclear plant as agreed? guest: we think that the market design has been created in new a sound legal basis. it is the same as a way noble energy credit. it often seems plants for the societal benefit of carbon mitigation.
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we feel good about it. we think it is the right thing for the state, we think it is the right thing for the economy. we think it is the right thing for the environment. cranet: that was chris speaking from the new york stock exchange earlier. let's get a check on the headlines. mark crumpton has more. obama administration is easing more sanctions against the including eliminating rom and cigars that travelers can bring home. the effects take place on monday. both presidential candidates are gearing up for their third and final debate on wednesday in las vegas. in an interview on the island the generous show hillary clinton warned against assuming she will maintain her position in national polls. >> obviously, there is a lot that is coming out which is
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distressing on many levels. i don't want anyone to think that this election is over because it has been so unpredictable up till now. i am not taking anything for granted. we have to work really hard for the next thread half weeks because who knows, who knows what can happen? earlyaccording to data, voting in florida and north carolina shows positive signs for secretary clinton. elizabeth moran is taking her disapproval of securities and exchange commission chairwoman mary jo white to a new level by calling on president obama to replace her. senator warren wants the president to demote white and replace it with one of the other sec commissioners. warren says that white has not pursued rules that would force corporate dollars to dispose clinical contributions. north carolina governor pat mccrory is getting a firsthand look at the damage caused by hurricane matthew. he's visiting tarboro located 60
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miles east of raleigh. overflowing rivers caused major flooding in the state. day cardws 24 hours a by more than 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. matt: thanks. turning to politics, donald trump's flailing presidential campaign is spelling great news for hillary clinton just twice five days out from election day. trump is holding a rally in greensboro, north carolina. viewers can watch his comments livego on bloomberg. this may not translate to wins in either house for democrats. the senate is more likely but even that is not guaranteed, right? >> it is not guaranteed.
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neither house is guaranteed. we see a bit of a drag from the top of the ticket for their broken candidate due to the fact that trump has sunk in the polls. there are numerous senators and candidates, come -- incumbents that have done some work to distance themselves him trump. and that is going a long way in their states and their pulling ahead and pulling with their democratic opponents. swing states will decide it and there is no clear linear relationship to their prospects. and donald trump polls. matt: are those your public and candidates are doing well the same republican candidates who had denounced donald -- a donald trump presidency? >> there is no real correlation. seen as one example, the most foldable incumbent. he was the first senator in the
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caucus to denounce trump and he is still the likeliest to lose. it has more to do with their respective states. scarlet: does denouncing or retracting endorsements of donald trump affect their electoral chances? >> there are some republicans trying to do a bit of a dancer. kelly ayotte whose -- has finally came out against him and said she could no longer vote for him after the allegations and his comments about women came out. there are other republicans like deb fischer and johnson -- john thune who strongly condemned him and they are back and/or -- on board. scarlet: the other interesting
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thing is that paul ryan was speaking on friday today and he made his case against hillary clinton but he did so by never mentioning donald trump same. there must have been an interesting dance. >> it is a very interesting dance. paul ryan came out publicly some of these allegations came out against trump and said he would no longer defend him. he is still voting for trumpet what he is doing is trying to set the stage for a hillary clinton white house where republicans will keep at least the house if not also the senate. he wants to take rack the reins alt-right and nativist government. he made clear that house republicans if they are elected back to congress, they will pursue their agenda. they will not accept some sort of mandate for hillary clinton which has been accepted in the past but mostly undying concept. republicans have not accepted
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it. matt: thanks for joining us. scarlet: how can mom's stay professionally relevant and engage while juggling mothering duties? this is bloomberg. ♪
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matt: this is bloomberg markets. i am matt miller. >> i am scarlet fu. we look at the pressure points of social change and where it is out pouring -- outpacing corporate america possibility to adapt. the mom project is a digital
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platform that allows mothers to staying gates by matching them up with employers. i spoke with the ceo, allison robinson. to work withtunate different companies from fortune 500 corporations to startups. from a talent perspective we have over 7000 professionals signed up. they are highly educated and have backgrounds like google and while busy -- walt disney. we are seeing that a lot of these companies are looking to be more agile in the way that they are resourcing thenizations and looking to work force and are able to infiltrate talent. >> that sounds like freelancing. >> they are descred as real
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answers or entrepreneurs. >> is this a situation where companies are looking for permanent higher raise or just a very workers to fulfill a certain time-based project? >> we build the company with the needs of enterprise companies in mind. i came from a corporate background and so we have been able to meet the company's needs whether that looks like project base or permanent work. >> who pays the retainer? >> there is no retainer. it is free to our talent to sign up and companies pay us a service fee if they want to commit work with a member on our platform. >> why did you decide to do this, you are at procter & gamble for eight years and doing pretty well and you took some time off to have your children. why did you go back to procter & gamble and look for something with flexible hours, why did you
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decide to move away and start something new? a great job and i was fortunate to take some time off and created the company while i was on maternity leave. it was while i was away from work when i realized how many women struggle to balance demands of being a full-time career woman and raising a family. many women were looking to stay in the workforce in a less than full-time capacity so i saw huge opportunity to retain more women in the workforce. i took it upon myself to make that a reality. >> did you do any canvassing to see how many companies offered those positions already? >> companies are increasingly traditionaltretch staffing models to allow them to better resource there organizations through peaks and valleys. some we are getting breaking news on samsung. the u.s. government is banning all samsung note 7 fonts from
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airline flights. they have burst into flames previously, causing injury or damage. we have been reporting on this for weeks now and samsung has taken billions of dollars in costs. they will take another $3 billion out in the next quarter. $2.3 billion in the current reporting quarter. samsung has canceled production of the note 7 completely. the u.s. government after the and lines have banned it, after samsung has canceled production, the government will then all note 7 phone from airlines. they were not allowed there anyway. this is bloomberg. ♪
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matt: this is bloomberg markets. scarlet: in global politics it
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has been a busy year for referendums. we have seen voters rejected peace deal and italians will vote in their own referendum. down policy choices come to a yes or no vote. the results are so complex experts spend years trying to understand them. our guest has done extensive research. our joe weisenthal is with us because he has been following the story fairly closely. let me start with you. why do political leaders keep using referendums as a tool when it has been proven that the outcome can be very volatile? guest: in some countries, they are required to. you, thed or a straw constitution requires referendums were a lot of major changes. in other countries like written or columbia, they are not necessarily required but they are based on a political calculation by the leaders of the time that might be a good idea or they might be likely
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necessary even if they are not legally required. matt: scarlet mentions they are volatile. it is a binary option usually end it is a democracy, everybody who wants to can vote, isn't that a great way to make decisions? yes: it can be. when they use the term volatility they are referring to the campaign. often when a government especially calls referendum, they have done a lot of polling and they think they know how it will turn out. the minute you get into a campaign they discover there is a lot more uncertainty about the outcome than they thought. lotcally, polls can move a over the course of a for a five-week campaign and it throws the outcome into uncertainty and throws off the political calculations that went into the referendum in the first place. matt: what does your work say about when governments should and should not use referendums?
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what is bad about them? think i know more about when they should not use them as opposed to when they should. they are a tool of democratic politics as you suggest. they can be used in a constructive way to engage the for a to broaden support proposal and to legitimize it. the problem is they are often called by governments for very short term political objectives .nd then they miscalculate their miscalculation causes a lot of turmoil and disturbance in politics that led to the referendum in the first place. you can't always predict how a campaign is going to go. in colombia, for example, one of the ones you mentioned, it was a peace treaty that everyone seemed to be in favor of and then when the former president came out against it, that dynamic changed. in britain calling suggested
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the remain would win. they did not expect boris johnson would come out and emerge as one of the leaders and that change the dynamic. matt: referendums can make sense in the democratic process but they are bad when there are -- they are used as an opportunity for politicians to pass off taking responsibility for doing an action and to throw to the people like that. guess: i think britain is a good example. there is no legal requirement. britain does not have a strong tradition of referendum politics. member of theen a european union for years. its membership was not in any doubt in the near future, anyway. himselfcan -- committed during the 20 15th election campaign and he did so mainly for short-term domestic political reasons of a partisan
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ukipe to undercut the vote. a low bar towas set to get passage. you wonder why there are not more checks and balances. matt: the majority wanted to leave the eu, at least those who showed up to vote. referendums in europe are chosen to do with heavy constitutional issues or the ones i read about in your study. in the u.s. it seems we have more moral referenda about gay marriage, whether it should be allowed or medicinal marijuana. those of the ones that we think of most often. is it used differently? guest: those are at the state level and the states are different in terms of the kinds of rules and practices they have for american ballot propositions. there has never been a national referendum in the u.s. and there
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is no provision for one. you for joining us today. matt: fascinating stuff. joe will be joining us again. wells fargo's cfo will talk with the focus on repairing the damage because of the accounts scandal. catch that interview at 4 p.m. eastern. this is bloomberg. ♪
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matt: i'm matt miller. scarlett: i'm scarlet fu. welcome to bloomberg markets.
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we are live from bloomberg world headquarters in new york for the next hour. we are also covering stories from san francisco, washington, and mask out. here is what we are watching. the big tanks are out with earnings today. we will get a fresh outlook from charles peabody in a few moments. shares of twitter are tumbling this afternoon. salesforce confirms it wilma be making a bid -- a bid for the social media companies saying it -- it will not be making a bid for the social media company, saying it is just not a fit. and president obama campaigns for hillary clinton today. julie hyman has a check on the markets.
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julie: no sort of dramatic reaction to her commentary. people not wanting to belong over the weekend. we saw some strength early on in the financials, for example, in the wake of earnings. that's fading away. really just a sideways movement as the day has progressed. over the past week, what we have is a point i'm percent pullback in the s&p 500, the second straight -- is a .9% pullback on the s&p 500, the second straight week of declines. i want to look at bombs on the week. here, we are seeing the second straight weekly gain in yields. rise in yields this month of almost 20 basis points, which would be the biggest rise we have seen going back to june of 2015. still historically low levels,
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to be clear. 1.79%. yellen's speech today notwithstanding, respective -- of this sentiment. gmc is an interesting story. as generalo be known nutrition, you can see a big leg up in the stock. there are reports that two chinese suitors were attempting to pursue a deal for the company. that caused some pop. but then it looked like investors were not impressed with the report after further scrutiny. interesting data one of our has to do withp the number of locations of gnc. a surprising number if you look at them compared to other retailers out there. what kind of exposure, for
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example, a buyer could get. you have gnc listed in thousands of stores. not far fromexample, a buyer co. you have cvs, which has 10,000 stores. then you have walgreens, alliance foods, dollar general, and dollar tree on the far end of the spectrum. the other breaking news is something scarlett mentioned, a report by the s&p that salesforce is not interested in buying twitter. it looks like this is finally the end of this story and what has been a lot of false starts. matt: thank you very much for that. let's get a check of headlines. for that, we go to mark crumpton in the newsroom. mark: house speaker paul ryan has been under sees from fellow republicans for his unwillingness to help donald trump. today, he is trying to draw distinctions between the gop and hillary clinton.
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the speaker accused clinton and liberals of pursuing a government heavy agenda. speaker ryan: they want an america that doesn't stand out. they want an america that is ordinary. a place where government is taken away from the people. were hisn's comments first significant public statement since he privately told house republicans he would no longer defend or campaign for trump, whose name the speaker did not mention during today's address. hillary clinton and donald trump are locked in a tight race for new hampshire. libertarian gary johnson gets 11%. in a head to head matchup,
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clinton leads trump 46%-40 1% in the state. both candidates have high unfavorable ratings. michigan's attorney general's office spent more than 2 million dollars this year in the investigation into flints lead tainted water crisis. the latest numbers include and investigator salaries. nine current or former public officials have been criminally scandal.n the the national hurricane center says hurricane nicole is moving east-northeast over the atlantic. in bermuda, the territory is trying to recover quickly from the category three storm. wind eased and overnight. schools and government offices were closed today. global news 24 hours a day powered by more than 2600 in oversts and analysts
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120 countries. im mark crumpton. this is bloomberg. back to you. scarlet: banks kicked off earnings this morning. if you look at shares, citigroup is the only one up. wells and jpmorgan are down. 's trading could reflect concerns about the sustainability of its revenue. mary and lake did not give further guidance. not given guidance. we are creating capacity to invest, but we will make decisions based upon their merit at explain them to you another venue. is charlesining us peabody. he has been covering banks for decades. if you look at how share prices are reacting, let's start with
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the trading results at city and jpmorgan. was this just a temporary bump? charlie: that is what the markets were expecting. a little broader based, potentially more sustainable. citigroup was concentrated in debt. there is concern that we are moving from good volatility too volatility. scarlet: matt and i talk about this a lot. when trading volumes are not , there is in any kind of volatility. if it's too volatile, you can't make the money you want. break it down. differentiate?u charles: if you listened to jpmorgan, they talked about good client flow. citigroup did too.
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bad volatility is categorized more by discontinuous pricing gaps, still liquidity. market makers and investors to play in that kind of market so the client flow slows down. it inwe hear about briggs the jpmorgan statement but not brexit iny bang -- the jpmorgan statement but not i statement. charles: the strength was in government trading, which revolved around what was going on with brexit, and then currency. let me ask you about something completely different. we are going to talk to the ceo of wells fargo. under his you about wellsing completely leadership,
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normalized to goldman and other umf tookors since stro over. is this a loss to have him resigning? charles: it's uncertain. they have a pretty deep bench there. i think the transition will be seamless. what is different -- and the stocks show that -- is they had growth. they were not impaired by the financial crisis. that's what it's being called in the question now. what is the future impact of their brand and their ability to grow? it's interesting, if you look at new credit card applications or new accounts opened since the settlement, they have dropped dramatically.
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charles: may have. there is concern about itss-selling and the role may have played. the stock is discounting some of that as well. scarlet: and of course, they are rehabilitating their image. now that wells fargo has split ceo and chairman role, is that going to be the new normal? is that what we are going to see from banks to try to prove to investors that they can forge ahead in this new environment? charles: i think we are migrating toward that. i think bankamerica on one hand can't get their revenues and earnings growing. there will be pressure for changes there. didn't we just have this fight with brian moynihan and jamie dimon?
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charles: but cycles change that may tend to bring back some of those pressures. gavemorgan and citi guidance to the fourth quarter. if you look at that guidance, its weakness versus what was just reported. some of that weakness doesn't incorporate volatility. if i look at citigroup -- and estimates for the fourth quarter are somewhere between $1.10, $1.20, i have a down year next year.r citi how do you do that in a 2% gdp environment when you are trying to normalize rates with central banks and you have uncertain capital markets? scarlet: what did they say? what is their response? matt: well, they are not giving guidance at this point. the banks are not. what was disturbing is that they toe not willing to commit
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flat extensions in 2017. can you grow revenues without growing costs? if you look at some of the subsidiaries, their bottom lines were down even one revenue was up, and part of that is because you are starting to see a normalization of credit card cost on the consumer side. scarlet: the era of cutting costs may have come to an end. charles peabody, thank you. up, twitter shares are plunging on a report that the sales process is virtually dead. no longer wants it. this is bloomberg.
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scarlet: this is bloomberg markets. tumblingtter shares after the salesforce ceo announced he would not make a bid for the social media company. joining us now is bloomberg editor at large cory johnson. and our guest covers the sector. was salesforce the last bidder ?eft does nobody else wants twitter now? like's its accommodation of things. one is the other is the sort of -- >> it's a combination of things. one is the price. the other is growth. is ifestion for buyers the price point is worth it. a limit in what they can get from twitter. isrlet: do you think this
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just a negotiating tactic on salesforce's part? were they come back if they could bring the price down more? cory: for a company seeing dramatically slowing sales growth, it's a problem. at a lower price, is it still as attractive? the way shareholders reacted to salesforce shares was dramatic. they sold shares because the deal didn't make strategic sense and there was concern about that. oh nothing then he off pays a lot of attention -- i think benioff pays attention to what is happening to the salesforce stock. he has made a number of acquisitions to try to get salesforce's weakening sales
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growth to improve. salesforce has fallen a lot. -- 24% year-over-year sales growth is down from 35% a year ago. there has been a dramatic slowdown in the growth rate of sales orders. i am looking at twitter stock over the past year. 72 cents right now. it is worth less than $12 billion. but it has been lower. at what point does it fall so low that it makes sense for other companies like disney or to come in and say, you know what? at this level, we might as well pick it up?
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click somewhere in between is --re >> somewhere in between is where it is a strategic buy. it will take time to fix twitter. be adin and yahoo! would good reference point for that. matt: what about whatsapp? twitter is not growing. was still adding users when facebook page $19 billion for a company nobody had ever heard of. y: i think whatsapp is different. twitter has had trouble monetizing. they are getting a little bit per advertiser, but that growth has slowed down. there's anemic growth in users. twitter may be as big as twitter is going to be, and that's a problem.
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scarlet: cory johnson in san francisco. thank you so much. time now for a bloomberg business flash, a look at some of the biggest business stories in the news right now. microsoft filed for regulatory approval from the european commission over its acquisition of linkedin. the eu is expected to set a november 22 deadline to conduct a review. the deal is exposed did as expected to close by the end of the year. it is the biggest in it -- the deal is expected to close by the end of the year. it is the biggest in the tech sector so far. is discussing the sale of private equity stakes. endowments 37he
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$.5 billion is in private equity assets. hired morgan stanley to advisecompanies them on a merger. that is your bloomberg business flash update. still ahead, we are looking at the gold miners etf. up 70% this year. we will explain the trade in today's options insight. this is bloomberg. ♪
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for optionse now insight with julie hyman.
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julie: thank you. joining me is alan when, chief market strategist at bullseye option. great to see you. it has been an interesting week here. as you pointed out in your note to me today, the nasdaq 100 made a record earlier this week, and then we have had this sort of muddling along. we had the vix rise. it seems like concern has come back and to the market. what you think in terms of where we are going from here? been tradings between $20-$12 for four years now. we get spikes, but it comes back to that range. is $16.oint we are just below that. that's something to look at on a weekly basis, with that midpoint, does the market trend above it or below it?
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julie: you pointed out the people are buying vix calls. there seems to be some expectation that maybe this week is different in some way. >> it could be just protection. call buying is typically 70% of the ratio. today, it's closer to 90%. for whatever reason, we have decent volume today. a lot of the sessions in the last two weeks have been about 50% of normal volume options. it pays to have some upside calls to have some protection in case there is another bout of volatility, but looking at the market in general, i wanted to point that out because we lose perspective. s&p is still up on the year. we have had this breakdown, but point. held a breakout we are essentially just trading
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sideways at the lower end of the range. here tradent to get of the day. we saw a rates rise. we saw dollar rise. gold held up relatively well in the face of that. does that solidify your confidence about gold? >> that is part of the premise. it could be viewed as a positive. it really is about risk and reward. looking at gds, the miners etf. below 12 inded january. it got up to 22. for risk reward, lean on the 22 level. call foring at a 20 january, more than three months of time. x trading at 23 right
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now, it's going for about four dollars. there's time for good things to happen. a modest recovery, up to the 28 level, the option would be 100%. 28 is where we were at the end of september. julie: and it's 23 right now, as you mentioned. thank you so much. have a great weekend. matt: thank you, julie hyman. coming up at the top of the hour, we are talking with the wells fargo ceo -- cfo, sorry. john shrewsbury will talk about earnings. the big issue is how to repair their reputation. matt: this is bloomberg. ♪
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mark: another woman has come
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forward claiming donald trump groped her in the 1990's. kristin anderson says she was at a crowded manhattan nightspot when she claims trump touched her inappropriately. anderson is one of a number of women who have come forward in recent days saying trump made unwanted sexual advances. he did with other accusations, trump says anderson is making the whole thing up. says that a new york times shareholder and donor to the clinton foundation has an interest in aiding clinton's campaign. -- will hold a referendum in december on a key constitutional change. it would limit the power of the senate in the upper house of parliament. italy's economy is stagnating and there has


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